The Fed Blog

Tuesday, October 16, 2012

S&P 500 Retailers

Not surprisingly, the recovery in retail sales since 2009 has been mirrored in the stock price index, forward earnings, and valuation multiple of the S&P 500 Consumer Discretionary Retailing Group:

(1) The group’s stock price index is up 182% since March 9, 2009, when the bull market began. It has significantly outperformed the S&P 500, which is up 111% since then.

(2) The group’s forward earnings rose to a fresh record high during the first week of October. Industry analysts are expecting that the group’s earnings will rise 16.1% next year following a 10.2% gain this year.

(3) Last week, the group’s forward P/E rose to 18, a level that has proven to be a lid on valuation since the start of the bull market. However, that doesn’t mean that the stock price index can’t continue to move higher as long as retail sales and forward earnings continue to do the same. It just might not continue to outperform the overall market by as much.

Today's Morning Briefing: Instant Gratification. (1) Market math for bulls. (2) Global revenues growth of 6% would be just right. (3) More upside for earnings. (4) Analysts see higher margins in 2013, but are lowering their estimates. (5) Can P/E break through 13 jinx? (6) Born to shop. (7) A dollar earned is a dollar spent. (8) All good for Q3’s real GDP. (9) Earnings outlook remains bright for retailers. (10) Beware of Chucky. (More for subscribers.)

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ABOUT: Dr. Ed Yardeni is the President and Chief Investment Strategist of Yardeni Research, Inc., a provider of independent investment strategy and economics research. This blog highlights excerpts from our research service, which is designed for investment and business professionals.

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